FTC Challenges Privacy Safe Harbor Certification Claims

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Six U.S. businesses have agreed to refrain from misrepresenting the extent to which they participate in any privacy, security, or other compliance program sponsored by a government or any third party, under the terms of proposed Federal Trade Commission consent orders.

The consent orders would settle the first FTC challenges to deceptive claims regarding certification under an international privacy safe harbor program administered by the U.S. Department of Commerce in consultation with the European Commission.

The cases were brought with the assistance of the Department of Commerce. The Department of Commerce maintains a public website where it posts the names of companies that have self-certified to the safe harbor.

The companies claimed that they were current participants in the safe harbor, even though their certifications had lapsed, according to the agency.

The safe harbor provides a mechanism for U.S. companies to transfer data outside the European Union consistent with European law. To join the safe harbor, a company must self-certify to the U.S. Department of Commerce that it complies with seven principles and related requirements.

Companies are required to recertify every yearin order to retain their status as “current” members of the safe harbor framework, the FTC explained.

The FTC announced the complaint and proposed consent orders on October 6, which are available in the CCH Trade Regulation Reporter and here on the FTC website.

Chemicals Giant to Divest Assets to Settle FTC Merger Challenge

This posting was written by Darius Sturmer, Editor of CCH Trade Regulation Reporter.

German-based BASF, the world’s largest chemical company, agreed on April 2 to settle FTC charges that its proposed $5.1 billion acquisition of rival chemical manufacturer Ciba Holding Inc. would be anticompetitive and violate federal law by reducing competition in the worldwide markets for two high-performance pigments.

Under the terms of a proposed consent order that would allow the transaction to proceed, BASF would be required to sell all assets—including the intellectual property related to the two pigments, bismuth vanadate and indanthrone blue—to a Commission-approved buyer within six months.

Pigments are small particles used to impart color to a range of products, including inks, coatings, plastics, and fibers. Both of the products at issue are high-performance pigments, offering superior durability and light-fastness compare to other types of chemical pigments. This makes them particularly suited for products exposed to sunlight and weather, such as automotive coatings. There are no viable substitutes for the two pigments in the applications for which they are used.

Unilateral Market Power

The Commission’s complaint alleged that the worldwide markets for both pigments are highly-concentrated. By eliminating competition between BASF and Ciba, the proposed transaction would allow the combined firm to exercise unilateral market power, the FTC contended, and increase the likelihood of coordinated interaction with the remaining firms in each market. Entry into either relevant market is not likely to be timely or sufficient to counteract the anticompetitive effect of BASF’s acquisition of Ciba.

Other Relief

In addition to the divestitures, the proposed consent order would require BASF to provide other relief to the eventual acquirer—such as supply agreements and protections for confidential information—and to facilitate the hiring of key employees.

The order also would allow the FTC to appoint an interim monitor to ensure that BASF complies with all of its obligations and a divesture trustee to sell the relevant assets if BASF failed to sell them within six months after the consent agreement is accepted by the Commission for public comment.

Canada Competition Bureau

On April 6, Canada’s Competition Bureau announced that commitments made by BASF to the Bureau, the European Union Competition Directorate, and the FTC resolved the Bureau’s competition concerns about the proposed acquisition.

The case is In the Matter of BASF SE, FTC File No. 081 and Docket No. C-4253. Further details appear here at the FTC website and at CCH Trade Regulation Reporter ¶16,286.